U.S. Pork Industry Baffled by Bans in China, Russia

posted on June 5, 2009

DES MOINES, Iowa (AP) -- Continued bans on U.S. pork imports by China, Russia and more than a dozen other countries have baffled government and industry officials, leading some to speculate that the issue is more about market share than health concerns.

The bans, instituted in the wake of the swine flu outbreak, cost the U.S. hog industry millions of dollars every week. And they continue despite insistence by international health officials that the pork is safe and the country's hogs are not to blame for the epidemic.

"It's politics and not science," said John Lawrence, a professor and livestock economist at Iowa State University. "The product is safe. So why restrict imports?"

From late April to late May, a reduction in hog prices that coincided with the swine flu outbreak cost U.S. producers about $81.5 million, said Steve Meyer, a livestock economist with the Paragon Economics, an Adel-based company that analyzes agricultural markets.

About 20 percent of U.S. pork is exported, and China and Russia are among the biggest buyers. Last year, China bought nearly $700 million in U.S. pork, ranking it third behind Japan and Mexico. Russia, ranked fifth with $476 million, has begun allowing some U.S. pork imports but maintains bans on 10 states.

Dave Warner, a spokesman for the Washington-based National Pork Producers Council, said U.S. producers have had long-standing disagreements with China and Russia. He believes the two countries could be using the swine flu scare to restrict imports and give a boost to their domestic hog industry.

"Both Russia and China, and all of these countries, know that this was not a food safety issue. So something else is going on there," Warner said. "It does seem like it's a kind of a convenient excuse."

Before the latest import ban, China already refused to buy any U.S. pork from hogs given the drug ractopamine, designed to produce a leaner meat. Warner said the drug has been approved for use by the U.S. Food and Drug Administration and been OK'd by 26 other countries.

China has defended its tough measures as necessary to block swine flu from the world's most populous country. China has been accused in the past of not acting quickly enough to prevent the spread of diseases, such as during the global outbreak of SARS in 2003.

Russia also has held to an earlier policy of requiring personal inspections of U.S. packing plants and storage facilities. Through that process, Russia has banned imports with little explanation from 33 U.S. pork plants, representing up to 50 percent of the export capacity to Russia, Warner said

The Russian policy violates World Trade Organization rules, but Russia isn't a member of the organization.

"In the case of Russia, they'd like to become self-sufficient in pork and chicken at some point, and so they're using this as an excuse to protect their own industry," Meyer, the livestock economist, said.

Russian officials said the ban on imports of raw pork from some U.S. states was based solely on health concerns.

"This measure has nothing to do with protectionism," said Alexei Alexeyenko, spokesman for the Russian state agricultural oversight agency Rosselkhoznadzor.

Alexeyenko said the ban does not help Russian pork producers because they lack the capacity to make up for the decrease in imported pork.

"Russia cannot meet the demand in its own market with pork produced domestically, so the accusation of protectionism sounds strange," he said. "There can be no protection of the domestic producers in this case."

He said Russia's concerns about pork are not fully dispelled by safety statements from groups such as the World Health Organization, the FDA and the U.N. Food and Agriculture Agency, because they stipulate that the pork is safe if properly cooked - but not raw.

China's Agriculture Ministry has not explained why the pork bans have not been lifted. They continue despite Agriculture Minister Sun Zhengcai stressing May 1 that swine flu had nothing to do with eating pork.

The China Daily, a state newspaper, reported last month that worries about swine flu have contributed to a collapse in pork prices, which fell 28.6 percent in April against the same month last year. Chinese officials were considering buying pork stocks to stabilize prices.

U.S. Trade Representative Ron Kirk has sent a letter to countries with import restrictions, seeking an end to the ban. On Wednesday, Kirk was headed for Russia, where the pork ban would be among the topics discussed, said his spokeswoman, Nefeterius McPherson.

Other countries with bans on U.S. pork are Ukraine, Azerbaijan, Kazakhstan, St. Lucia, Indonesia, Thailand, Bahrain, Uzbekistan, Kyrgyzstan, Jordan, Macedonia, South Korea and Malaysia. Those nations import far less U.S. pork than China or Russia

The import bans come as domestic demand for pork has grown following a drop blamed on fears over swine flu.

The value of an average U.S. hog dropped from $128.54 on April 24, when media attention focused on the illness, to $111.76 on May 7. The price was back to about $125 by the end of May.

Nearly one-third of the nation's hog inventory comes out of Iowa. Other major pork-producing states include North Carolina, Illinois and Minnesota.

Iowa Secretary of Agriculture Bill Northey said the state would try to keep the pressure on federal officials to demand the ban be ended.

"It's pretty hard to make any health and safety arguments," Northey said.

It all means that an industry once optimistic for increased profitability, thanks to a drop in supply and lower grain prices, will instead have to just hang on, said Lawrence, the Iowa State economist. As many U.S. pork producers face an uncertain future, officials must stress international trade agreements with countries that maintain bans, he said.

"Our government officials have reason to go to them and say 'Look. We've got rules of trade and you're not following them,'" Lawrence said. "The biggest challenge is bankruptcy or going broke. Exports are certainly a key to getting out of that, because we cannot adjust supplies quickly, but we can adjust trade more quickly."

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